71) Fred Handel owns 2000 shares of Haydn Inc. stock which is currently selling for $18 per share. If the company repurchases 10% of its outstanding shares at $18 per share and Fred chooses to sell back 200 shares
A)his investment in the company will decrease by $3,600 and his percentage of ownership will stay the same.
B)his investment in the company and his percentage of ownership will each decrease by 10 %.
C)the value of his remaining shares will increase to $20 per share and his percentage of ownership will fall by 10 %.
D)his investment in the company and his percentage of ownership will stay the same.
72) Fred Handel owns 2000 shares of Haydn Inc. stock which is currently selling for $18 per share. If the company repurchases 10% of its outstanding shares at $18 per share and Fred chooses not to sell any shares back to the company
A)the value of his shares will stay the same and his percentage ownership of the company will increase by 10 %.
B)the value of his remaining shares will stay the same and his percentage of ownership will increase by 11.11 %.
C)his investment in the company and his percentage of ownership will stay the same.
D)his investment in the company will decrease by $3,600 and his percentage of ownership will stay the same.
73) ZZZ Corporation had net income of $100 million last year and 50 million common shares outstanding. They declared an 8% stock dividend. Calculate EPS before and after the stock dividend.
A)EPS before would be $0.50; after the dividend, EPS would be $0.46.
B)EPS before would be $2; after the dividend, EPS would be $1.85.
C)There is not enough information to make this calculation.
D)Since they made $100 million in net income, the EPS cannot change.
74) Information asymmetry takes into account the higher stock price that can be achieved due to certainty from the accessibility of information between management and investors.
75) According to the Modigliani & Miller dividend indifference theorem, if a company decreased its dividend per share, an investor would be forced to sell his common stock at a depressed price.
76) Dividend payouts have the effect of lowering the company?s debt to equity ratio.
77) As a firm?s investment opportunities increase, the dividend payout ratio should increase.
78) The timing of dividend payments will not matter if the firm?s rate of return on equity and the
investor?s required rate of return are the same.
79) Although the rates have changed from time to time, dividends and capital gains have always been taxed at the same rate in the U.S.
80) Empirical evidence is conclusive that dividend policy matters.
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